Why EDI?

Why EDI?The European electronics group of Xerox has a policy of working exclusively with EDI-capable vendors such as St Albans-based distributor Kestronics. Anna Bata, the senior buyer within Xerox’s Electronics Business Group, and John Barford, business systems manager at Kestronics, answer some commonly asked questions. Q How can a company such as Xerox,who sources hundreds of thousands of components a year from a variety of vendors, maximise the effectiveness of EDI? A AB: As with any efficient organisation we are keen to minimise supplier numbers which is why selection of distributors capable of supplying a variety of components is important. However, because we manufacture a wide range of products for use in Xerox and third party customer’s systems worldwide, we still have a substantial vendor base. The key to effective use of EDI, therefore, is standardisation and it is critical that the EDI process is identical for each different supplier. We achieve this by working closely with prospective vendors, ensuring that they are working to the same EDI standards used by Xerox and, in cases where a vendor is new to EDI, providing support on setting up an EDI link. This support can range from seminars and training to guidance on choice of EDI software package. Q How long does establishing an EDI link with a new distributor typically take? A AB: Often, if a distributor is already using EDI, we will be up and running with them in under two weeks. For vendors who are starting from scratch with EDI it can be anything from four weeks to three months.
JB: What organisations such as Xerox want is long-term partnership and, therefore, it is important to spend as much time as is necessary to get the system working efficiently. Companies that are new to EDI need to purchase hardware and software, subscribe to the EDI network and have a short period of parallel operation to ensure that the link works without errors. All of these stages are critical and may take time. Q Are the full benefits of EDIbeing fully exploited by distributors? A AB: EDI offers an ever-growing number of different message types from basic purchase order to acknowledgements, forecasting, despatch advice, shipping schedules and invoicing. As a result, different distributors are at different stages of development in terms of the message types that they use. In reality, very few organisations use the more advanced capabilities, though most have strategies to take advantage of these in the future. Q There are still some distributors who don’t yet use EDI. Why is that? A AB: In many cases EDI is customer driven and it may be that those distributors are simply not working with customers who demand it. However, this is becoming less common and all distributors should now have a well thought out EDI strategy. At Xerox, EDI allows the Materials group to spend less than two days per week ordering over 4000 different components. This simply would not be possible if we had to work with non EDI-capable vendors. Currently, 95 per cent of our materials receipts are covered by EDI transactions.
JB: There’s a perception among a minority of companies that EDI is costly and difficult to implement. The reality is that a simple EDI link can be set up quickly using a single PC. Initially a company may just print off the orders that are received and manually enter them onto their own system. The more complex integration of the EDI link with internal stock control systems can be done later in a phased and controlled manner that is totally transparent to the customer. Q And does effective EDI really mean paperless order processing? A JB: In theory that is exactly what it means but in reality there is no getting away from the fact that people still like paper. This means that orders are invariably printed out at some stage. Ironically considering the fact that EDI helps improve the quality of the service offered to the customer, one of the main reasons for an ISO9002-registered distributor to print out orders is that quality auditors still want to see hard copy as evidence of procedural conformance.

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